2013-12-20 18:02:01 -
A.M. Best Europe – Rating Services Limited has placed under review with negative implications the financial strength rating of “A-” (Excellent) and issuer credit rating of “a-” of Pozavarovalnica Sava Re d.d. (Sava Re) (Slovenia).
The ratings actions reflect the uncertainty associated with Sava Re’s exposure to the fragile banking sector in Slovenia, following the company's announcement which highlights further exposure to write-downs of its investments.
At the third quarter of 2013, Sava Re reported permanent impairments of EUR 4.8 million for its subordinated bond and equity investments in two liquidated banks, along with a fair value loss of EUR 12 million associated with its total subordinated bond investments in the Slovenian banking sector.
In December 2013, the Slovenian government released the outcome
of an external audit on the domestic financial sector. Based on the report, Sava Re has permanently impaired its remaining subordinated financial investments of EUR 15.7 million in Slovenian banks, which represent 6.7% of shareholders’ funds and minority interests as at the third quarter of 2013.
The ratings of Sava Re will remain under review with negative implications until A.M. Best can assess the company's financial results for the full year of 2013. The evaluation will consider the impact of 2013’s performance on Sava Re’s consolidated risk-adjusted capitalisation, as well as the potential for further investment losses due to the company’s exposure to the Slovenian economy. Any corresponding plans to support Sava Re’s capital management strategy going forward will also be considered. A.M. Best expects to resolve the status of under review with negative implications in January 2014.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
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